Welcome to today's Inside B.S. show. My name is Dave Lorenzo and today's topic is how to identify critical positions for succession planning. So you wanna know how can you identify the most important positions for succession planning.

Okay, I gotta start off by telling you that every position is critical for succession planning. You've heard me say it a million times if you've heard me say it once, everybody from the janitor all the way up to you, the CEO. But when you start this process, if you have a limited amount of time, if you haven't connected with me, haven't connected with Nicola, my business partner, and we're not running the process for developing a succession plan for you, here's how you do it if you're doing it on your own.

You start with you, the CEO, and you develop a succession plan for yourself first. And you start with continuity or contingency planning. You've heard me talk about this before.

You start with what happens if you can't come to work tomorrow, what happens if you can't come to work for a week, what happens if you can't come to work for a month, a quarter, you do that. So that's how you start, by writing down the critical things you do every day and how people can handle them. And you start with yourself, the CEO.

You identify multiple people who could do the different aspects of your job. So that's the contingency or continuity planning part of this. For your permanent replacement, so what it would be like for you to treat your business like an investment, for you to be the CEO but have somebody running the business day to day, what that looks like is you're gonna have to create a new position.

So the first thing I recommend you do is you separate CEO and here in the US we use the title president. Have the president run the day-to-day operations. Have the president be the person who oversees the business and sets up the long-term strategic plan but you as the CEO approve and sign off on the strategic plan and the president is responsible for all the day-to-day operations.

So you create this new role, you identify someone to fill in that role and basically they're gonna replace you on a day-to-day basis in your business. That's how you start with you and your succession plan. Then you identify the next level down.

So the C-suite, if you will. Chief operating officer, chief financial officer, chief sales or chief revenue officer, whatever you call that role. Marketing, chief marketing officer, head of HR.

Identify all of those people and ask them to do exactly what you're doing. Figure out who the next person up is going to be and begin to train them on their roles and responsibilities. So it starts with the C-level, you and you identify a president and then the people who are in the C-suite, they identify people who would eventually replace them and it goes the next level down, the next level down, the next level down.

My philosophy is that this is part of the culture, part of the fabric of the organization. Everybody's performance review is 2 3rds based on how they're doing in their current role and 1 3rd based on how they're training someone to fulfill their role in the future as well as how they're getting ready for their next role. So 2 3rds current role, 1 3rd how they're helping someone fill their shoes and how they're filling someone else's shoes.

So that final 3rd is divided in half, them getting ready for their next project, them filling their position with somebody below them. So it starts with you and that's the first thing you need to identify and when we get called, when Exit Success Lab, Nicola and I get called, it's always the CEO needs to identify a successor but the organizational element of this is where the value really comes in. So we at Exit Success Lab get called for succession planning and transitions in family business all the time and most of the time those calls are help me get the next generation of family member ready and that's fine.

If you're identifying that you yourself are gonna be replaced by your son, your daughter, nephew, niece, whatever, we can help you do that and you do that exactly as I've just outlined it and exactly as I've outlined it in previous InsideBS shows and you can watch those by the way on YouTube or you can go to getinsidebs.com and subscribe and you'll get all the shows there. So if you're looking to pass your business on to the next generation, you first start with yourself and you work backwards. Now the question comes up with us all the time, okay Dave, I don't have a next generation.

The next generation in my business isn't gonna be ready. What do I do? There's two things you can do. We can help you find a successor.

We can go outside and find a person. So you're the CEO and president right now or maybe you don't have the title of president. We can go find you a person who's gonna be the president and work with you for two years, 18 months, three years, 36 months.

And they can get ready to fill your role as CEO. We can help you do that from the outside or we can help facilitate a sale of your business. But rest assured, part of the sale of your business is absolutely going to be making sure that every role in the organization has a successor identified and you are going through the process of planning for the successor for each of these roles.

That's essential and that's why we've spent so much time and that's why there are so many shows on my YouTube channel on succession planning. If you've done succession planning right, your business is probably going to be worth 30 to 50% more than it would be worth if you haven't done succession planning right. I'm gonna say that again because it's so important.

If you've done succession planning right, your business could be worth as much as 50% more than it would be worth if you haven't done succession planning, why? Because you as the CEO, once you're removed from the equation, the business should still be able to run without you. There should be one person or two people ready to take your place and there should be backfill for the positions of the people who are going to all move up if you step out of the business. When somebody goes to buy your business, they want a business that can run without you.

They're not going to pay for a business that needs you involved on a day-to-day basis. In fact, the people who run your business are probably the best people on earth for those roles but the fact that you can easily replace them is incredibly valuable for you and for the next person who buys your business. Many of you who are watching this or many of you who are listening to this as a podcast, you have aspirations of selling your business to private equity one day.

You got dollar signs in your dreams every night because you think your business is going to be sold to private equity and it might be sold to private equity. There's a possibility that you could do that and to make it more saleable to private equity, you need to have someone ready to step into your shoes and take over as the leader and then you need to have someone for every role in the organization. If I'm presenting your business to a private equity analyst, someone who's looking to buy it, and I tell that analyst and the CEO has a successor already prepared and in fact, all the C-level positions have successors prepared and identified and the department heads have successors prepared and identified, they're not gonna believe it.

So they're gonna have to go in and we're happy to show them your succession plan and show them that you've made it part of the performance review process. As a business, this is an incredible competitive advantage for you and as consultants, this is an incredible competitive advantage for us that we work with you to do this. So if you're wondering how to identify critical positions for succession planning, you start with yourself and you work down the tree of people in the organization chart.

This is the Inside BS Show. My name is Dave Lorenzo. I'm the Godfather of Growth and I'm here with you every day with a brand new show.

Join us again tomorrow at 6 a.m. for another edition of the Inside BS Show.